Reply to: Taxed but not benefiting

[webberg]

I'm also going to point out here (and perhaps in other threads), that I'm not trying to be difficult or pedantic or to fight HMRC's corner.

Tax and tax law is simultaneously very precise and very vague. Certain words and phrases can have closely defined meanings but the use of them in the context of the legislation can lend them meanings that may or may not be intended and which a Judge often struggles to untangle.

In the past this has allowed promoters to make certain claims as to the effectiveness of their products which only subsequent cases and statements from Parliament (I don't count statements from HMRC as they have no better idea of the will of Parliament than you and I do) have shown to be rather less than correct.

You would have thought HMRC had learned a lesson and that they would be rather more precise. I think however that they have failed that exam and continue to be very lax in how they use words.

My purpose therefore in being picky, precise, pedantic [insert favourite word here] is to try and demonstrate that it is not enough to read the words from HMRC. You have to understand historical and present context and the limitations of HMRC in that they are a tax authority and not legal experts.

[webberg]

It gets better than that, from HMRC's words:

Not employment status for tax reasons just simply employment status.

You need to be careful with that.

If a case went to Employment Tribunal, would a Judge there place any weight on a guidance note from the tax authority that - in context - is very clearly concerned with tax matters?

I suggest therefore that reading into HMRC's use of a phrase, something that can be applied in areas of law outside taxation, is at best hopeful thinking.

[JohntheBike]

The point I'm making is there is no such thing as an inside ir35 contractor anymore. The changes being made do align tax and employment by using the worker status for worker or self employed. A contractor is either self-employed (psc irrelevant), a worker or employee.

In the guidance released today their is no mention of CEST or working practice review just a simple worker/self employed/employee decision. So if employment status is the deciding factor which court case law should a client co law team look to ET or FTT?

So if employment status is the deciding factor which court case law should a client co law team look to ET or FTT

given that no one has been able to answer my question regarding what factors each court should consider, there should be no difference. However, that remains to be seen. Remember that the FTT used to be called The Commissioners for Taxes and then and now there is no mention of "employment" in the court's title.

[JohntheBike]

Point of order - I've been saying that the clients are putting people into employment while avoiding the associated costs and responsibilities for at least three years now. I don't need that bit explaining. Moreover I was blogging nearly 10 years back that HMG should be chasing the client, not the contractor.

It's just that the legal framework to resolve that through the courts is not yet an option, nor, unless someone persuades HMG that what they are doing is wrong, will it ever be.

I've been saying that the clients are putting people into employment while avoiding the associated costs and responsibilities for at least three years now.

Moreover I was blogging nearly 10 years back that HMG should be chasing the client, not the contractor.

I was saying this in 2000!

[JohntheBike]

Some, not all

so exactly what paid leave would a worker be entitled to and how would this differ from what a full employee would be entitled to? If there is any paid leave entitlement at all for a worker, then that is a potential cost to the client if an individual is adjudged as a worker.

Given all the risks, I would tend to agree with NLUK, in that many private sector clients are likely to move to umbrella or agency PAYE models.

[malvolio]

The point I'm making is there is no such thing as an inside ir35 contractor anymore. The changes being made do align tax and employment by using the worker status for worker or self employed. A contractor is either self-employed (psc irrelevant), a worker or employee.

In the guidance released today their is no mention of CEST or working practice review just a simple worker/self employed/employee decision. So if employment status is the deciding factor which court case law should a client co law team look to ET or FTT?

Point of order - I've been saying that the clients are putting people into employment while avoiding the associated costs and responsibilities for at least three years now. I don't need that bit explaining. Moreover I was blogging nearly 10 years back that HMG should be chasing the client, not the contractor.

It's just that the legal framework to resolve that through the courts is not yet an option, nor, unless someone persuades HMG that what they are doing is wrong, will it ever be.

[BlueSharp]

The point I'm making is there is no such thing as an inside ir35 contractor anymore. The changes being made do align tax and employment by using the worker status for worker or self employed. A contractor is either self-employed (psc irrelevant), a worker or employee.

In the guidance released today their is no mention of CEST or working practice review just a simple worker/self employed/employee decision. So if employment status is the deciding factor which court case law should a client co law team look to ET or FTT?

[malvolio]

Notice the last sentence of that link

Some, not all

[PTP]

OK, but being an employed worker is not the same as being an employee. To understand why, start from here...

Notice the last sentence of that link

Workers are entitled to some statutory rights, including those in relation to the national minimum wage, working hours and annual leave.

[malvolio]

OK, but being an employed worker is not the same as being an employee. To understand why, start from here...

[JohntheBike]

Why do you think workers are not entitled to rights?

Employment status: Worker - GOV.UK

Employment rights
Workers are entitled to certain employment rights, including:

getting the National Minimum Wage
protection against unlawful deductions from wages
the statutory minimum level of paid holiday
the statutory minimum length of rest breaks
to not work more than 48 hours on average per week or to opt out of this right if they choose
protection against unlawful discrimination
protection for ‘whistleblowing’ - reporting wrongdoing in the workplace
to not be treated less favourably if they work part-time
They may also be entitled to:

Statutory Sick Pay
Statutory Maternity Pay
Statutory Paternity Pay
Statutory Adoption Pay
Shared Parental Pay

I think the right to paid holidays will be the cruncher. What is the statutory minimum? Ms. Winchester's claim for holiday pay must have been based on some statutory figure.

Looks like 28 including Bank Holidays. I guess some organisations will pay more based on years of service -

How much annual leave am I entitled to by law, and when can I take it? | WorkSmart: The career coach that works for everyone

[BlueSharp]

It says "Employment status of the worker", not "of the employee". Workers and employees are different beasts, and since the employees' status is pretty clear anyway, rights as an employee have no part in the discussion since workers aren't entitled to them.

As has been said many times, the FTT and the ET use the same criteria, but they are applied to entirely different cases. There is no legal requirement, much less case law, to combine the two which work on entirely separate laws anyway. And personally I doubt there ever will be.

Why do you think workers are not entitled to rights?

Employment status: Worker - GOV.UK

Employment rights
Workers are entitled to certain employment rights, including:

getting the National Minimum Wage
protection against unlawful deductions from wages
the statutory minimum level of paid holiday
the statutory minimum length of rest breaks
to not work more than 48 hours on average per week or to opt out of this right if they choose
protection against unlawful discrimination
protection for ‘whistleblowing’ - reporting wrongdoing in the workplace
to not be treated less favourably if they work part-time
They may also be entitled to:

Statutory Sick Pay
Statutory Maternity Pay
Statutory Paternity Pay
Statutory Adoption Pay
Shared Parental Pay

Yes we are aware the courts are separate however the client can now be taken to the ET due to their determination. There is also the question of MOO, a key distinction between an Employee and a Worker at an Employee Tribunal IMO, and also a key indicator if an engagement falls inside or outside of IR35 something a client must decide if it is present or absent when using reasonable care in their determination.

[malvolio]

It says "Employment status of the worker", not "of the employee". Workers and employees are different beasts, and since the employees' status is pretty clear anyway, rights as an employee have no part in the discussion since workers aren't entitled to them.

As has been said many times, the FTT and the ET use the same criteria, but they are applied to entirely different cases. There is no legal requirement, much less case law, to combine the two which work on entirely separate laws anyway. And personally I doubt there ever will be.

[JohntheBike]

It gets better than that, from HMRC's words:

Not employment status for tax reasons just simply employment status

.

and I hope this is the Achilles Heel of the proposals. Unless the organisation making the determination uses a structure other than the standard client-agency-contractor situation, then they are likely to fall foul of the legislation.

[BlueSharp]

Given how precise Webberg has been about use of the term "Case", I'll point out that I think "Equivalent" isn't the right word......it's certainly not what HMRC are saying or implying in guidance issued today: April 2020 changes to off-payroll working for clients - GOV.UK




So even HMRC admit, we wouldn't be paying the EQUIVALENT of employment taxes.............we would actually be paying employment taxes.

So just like WordIsBond's post 20/08/2019 19:54.........

The big gap that Webberg thinks is there is between the "apparent two statuses", I don't believe there is.

Also HMRC in that guidance make no distinction between an employment status for tax purposes and an employment status for other purposes. You've just got one employment status.

It gets better than that, from HMRC's words:

What you need to do as a client
You will be responsible for deciding the employment status of workers. You’ll need to:

decide the employment status of a worker - you must do this for every contract you agree with an agency or worker
pass your determination and the reasons for the determination to the worker and the person or organisation you contract with
make sure you keep detailed records of your employment status determinations, including the reasons for the determination and fees paid
have processes in place to deal with any disputes that arise from your determination
If you’re also the fee-payer and the off-payroll working rules apply, you will need to deduct and pay tax and National Insurance contributions to HMRC.

Not employment status for tax reasons just simply employment status.

From what I can see a client has a couple of options, Outside IR35\Contractor, PAYE (Has it's own resourcing issues for the incumbent), Declare outside ir35 but only take on via an Umbrella (Most conservative), Declare they are an employee but provide no Employee Benefit.